Dr. Mukesh Bansal, Ahmedabad V. The ACIT.,Cent.Circle-2(3), Ahmedabad

ITSSA 481/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0718 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation; Salary income; Corroborative evidences; Deemed dividend; Unabsorbed depreciation
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G. D. AGARWAL , VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER IT (SS) A NO . 480 & 481 /AHD/2011 A. Y S . 200 4 - 0 5 & 2006 - 07 DR. MUKESH BANSAL, 23, HATKESH SOCIETY, DARPAN 5 ROADS, NAVRANGPURA, AHMEDABAD. PAN: AAXPB 5858N VS ACIT, CENTRAL CIRCLE - 2(3), AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SUBHASH BAINS , CIT - D.R. . ASSESSEE(S) BY : SHRI M.K. PATEL , A.R. / DATE OF HEARING : 07 / 0 4 /201 5 / DATE OF PRONOUNCEMENT : 17 / 04 /201 5 / O R D E R PER: S. S. GODARA , JUDICIAL MEMBER THESE TWO A SSESSEE S APPEAL S FOR ASSESSMENT YEARS 2004 - 05 AND 2006 - 07 , ARISE FROM A COMMON ORDER OF CIT(A) - III, AHMEDABAD , DATED 01.07.2011 IN APPEAL NO S . CIT(A) - III/261 & 262/ACIT/CC - 2(3)/10 - 11 , IN PROCEEDINGS U/S.153A R.W.S. 143(3) OF THE INCOME TAX ACT HEREINAFTER THE ACT . 2. THE A SSESSEE S ONE OF THE GRIEVANCE I.E., DISALLOWANCE OF BUSINESS LOSS ARISING OUT OF UNABSORBED DEPRECIATION OF RS.92,804/ - AND RS.97,814/ - RESPECTIVELY IS IDENTICAL IN BOTH IT (SS) A NO. 480 & 481 /AHD /201 1 DR. MUKESH BANSAL . FOR A.Y S . 200 4 - 0 5 AND 2006 - 07 - 2 - CASES . IN LAT T ER ASSESSMENT YEAR, HE CHALLENGES DEEMED DIVIDENDS ADDITION U/S.2(22)(E) OF THE ACT OF RS. 77,938/ - . 3. THE A SSESSEE - AN INDIVIDUAL IS A DOCTOR. HE IS A D IRECTOR IN M/S. BRIJ BASANT HOSPITAL PVT. LTD. HOLDING 37% O F ITS SHARE S . THE DEPARTMENT CONDUCTED A SEARCH ON 21.08.2008. THIS ALSO CU L M INA TED IN ISSUANCE OF A SECTION 15 3 A NOTICE. THE ASSESSEE FILED HIS RETURN ON 15.02.2010 DECLARING TOTAL INCOME OF RS.1,36,440/ - . H E DERIVES SALARY INCOME FROM THE HOSPITAL AND ALSO RUN HIS C ONSULTANCY. THE ASSESSEE HAD CLAIMED BUSINESS AND PROFESSION LOSS OF RS.92,804/ - . H E COULD NOT PRODUCE ANY BOOKS AND OTHER SUPPORTING DOCUMENTS. HE WOULD PLEAD THAT THE SAME WERE NOT AVAILABLE SINCE LOST IN RENOVATION OF HIS HOUSE. THE ASSESSING OFFICER RE JECTED HIS CLAIM FOR THIS VERY REASON IN ASSESSMENT ORDER DATED 31.12.2010 THEREBY ADDING THE AFORESAID SUM OF RS.92,804/ - IN HIS INCOME. THE FACTUAL POSITION APPEARS TO BE THE SAME IN THE LATTER ASSESSMENT YEAR AS WELL. 4. THE ASSESSEE PREFERRED APPEAL S . HE COULD NOT PRODUCE ON RECORD BOOKS AND OTHER SUPPORTING EVIDENCE. THE CIT(A) HAS REJECTED HIS CLAIM OF BUSINESS LOSS IN BOTH ASSESSMENT YEARS . 5 . WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE CASE FILES. THE ASSESSEE FILES BEFORE US HIS RELEVANT PROFIT AND LOSS IT (SS) A NO. 480 & 481 /AHD /201 1 DR. MUKESH BANSAL . FOR A.Y S . 200 4 - 0 5 AND 2006 - 07 - 3 - ACCOUNT S , C OMPUTATION AND DEPRECIATION CHART ETC. THE REVENUE OBJECTS ADMISSIBILITY THEREOF. THE A SSESSEE S PLEA OF HAVING LOST THE SE DOCUMENT S IN RENOVATION WORK HAS NOWHERE BE EN REJECTED IN EITHER OF THE LOWER ORDER . T HE DEPRECIA TION CHART AT PAGE NO.6 OF THE PAPER BOOK RELATES TO BUILDING, COMPUTER, SCOOTER AND MOTOR CAR AMOUNTING TO RS.1,68,6 7 5/ - . IT SEEMS TO HAVE BEEN CARRIED FORWARD IN THE IMPUGNED ASSESSMENT YEAR AS UNABSORBED DEPRECIATION . IN THESE CIRCUMSTANCES, WE REJECT T HE REVENUE S TECHNICAL OBJECTION AND TAKE ALL THE AFORESAID DOCUMENTS ON RECORD IN THE INTEREST OF JUSTICE SUBJECT TO ALL JUST EXCEPTION. THE REVENUE DOES NOT DISPUTE CONTENTS THEREOF. THIS MAKES US TO TREAT THE UNABSORBED DEPRECIATION IN QUESTION TO BE GE NUINE AND REVERSE LOWER AUTHORITIES FINDINGS ON FACTS . W E ALSO ASSUME THAT THE ASSESSEE MUST HAVE USED THE RELEVANT ASSETS FOR HIS PERSONAL USAGE AS WELL. THEREFORE , WE FEEL THAT INTEREST OF JUSTICE WOULD BE MET IN CASE THE IMPUGNED BUSINESS LOSS IS ACCEPTED TO THE EXTENT OF RS.60,000/ - IN EACH CASE. ORDERED ACCORDINGLY. THE ASSESSEE S RELEVANT GROUNDS IN BOTH APPEALS ARE PARTLY ALLOWED. CASE APPEAL IT( SS )A NO.480/AHD/2011, FOR A.Y.2004 - 05 IS PARTLY ALLOWED. 5 . THIS LEAVES US WITH T HE SECOND ADDITION OF DEEMED DIVIDEND U/S.2(22)(E) OF IT ACT AMOUNTING TO RS.77,938/ - IN IT(SS)A 481/AHD/2011 . THE ASSESSING OFFICER FOUND THE A SSESSEE S OPENING DEBIT BALANCE OF RS. 9,87,3 11/ - IN HOSPITAL S IT (SS) A NO. 480 & 481 /AHD /201 1 DR. MUKESH BANSAL . FOR A.Y S . 200 4 - 0 5 AND 2006 - 07 - 4 - BOOKS. H E HOLDS 3 7 .3 8 % OF ITS SHARES. THE ASSESSI NG OFFICER NOTICED A SSESSEE TO HAVE RECEIVED A SUM OF RS.13,14,263/ - AND RETURN ED ONLY RS.8,14,260/ - IN THE RELEVANT ACCOUNTING PERIOD. THE ASSESSEE HAD TREATED THESE AMOUNTS AS LOANS AND ADVANCES. THE C OMPANY M/S. BRIJ BASANT HOSPITAL PVT. LTD. HA D ACCUMULATED PROFIT OF RS.2,58,179/ - AS ON 31.03.2006 . THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 31.12.2010 T REATED THE IMPUGNED SUM AS DEEMED DIVIDEND TO THE EX TENT OF ACCUMULATED PROFIT S OF RS.2,58,179/ - . 6. THE CIT(A) HAS PARTLY AFFIRMED THE ASSESSING OFFICER S FINDINGS AS UNDER: 7. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT. I HAVE ALSO SEEN THE BALANCE - SHEET AND PROFIT & LOSS ACCOUNT OF BRIJ BASANT HOSPITAL FOR A.Y. 2006 - 07. FOR THE - SAKE OF CONVENIENCE, THE P&L ACCOUNT OF BRIJ BASANT HOSPITAL PVT. LTD. IS REPRODUCED AS UNDER: BRII BASANT HOSPITAL PRIVATE LIMITED, AHMEDABAD. PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31 ST MARCH, 2006. AMOUNTS IN(RS.) PARTICULARS SCH FOR THE YEAR ENDED ON 31.03.2006 FOR THE YEAR ENDED ON 31.03.2005 INCOME HOSPITAL INCOME EXPENDITURE MEDICINE EXPENSES ADMINISTRATIVE, SELLING & DISTRIBUTION DEPRECIATION G 2573655 2573655 1307667 663388 396132 2367187 3408510 3408510 2372403 578291 423877 3374571 IT (SS) A NO. 480 & 481 /AHD /201 1 DR. MUKESH BANSAL . FOR A.Y S . 200 4 - 0 5 AND 2006 - 07 - 5 - PROFIT/(LOSS) BEFORE TAXATION LESS: PROVISIONS FOR TAXATION LESS: PROVISION FOR FBT ADD: DEFERRED TAX ASSETS PROFIT/(LOSS AFTER TAXATION BALANCE BROUGHT FORWARD BALANCE CARRIED FORWARD TO BALANCE SHEET NOTES ON ACCOUNTS H 206468 94800 6901 180241 285008 (2689) 258179 33939 2661 0 0 31278 (58107) (26829) 8. FROM THE ABOVE P& L ACCOUNT, IT IS SEEN THAT AN AMOUNT OF RS.1,80,241/ - BEING THE DEFERRED TAX ASSETS HAS BEEN ADDED TO ARRIVE AT THE FIGURE OF THE BALANCE - SHEET CARRIED FORWARD TO THE BALANCE - SHEET OF RS.2 , 58,179/ - . THE CONTENTION OF THE AR IS THAT THIS AMOUNT OF RS.1,80,241/ - BEING DEFERRED TAX ASSETS IS NOT A PART OF ACCUMULATED PROFIT BUT ONLY A NOTIONAL ENTRY PASSED IN THE BOOKS OF ACCOUNT TO COMPLY WITH THE REQUIREMENT OF ACCOUNTING 22 (AS - 22) 'ACCOUNTING TO TAXES ON INCOME'. ACCORDING TO HIM, THE ACCUMULATED PROFIT OF THE COMPANY IS IN FACT RS.77,938/ - I.E. RS.2,58,179/ - ( - ) RS.1,80,241/ - . IN MY VIEW, THE DEFERRED TAX ASSETS OF RS.1,80,241/ - IS NOT A PROFIT OF THE APPELLANT AND THEREFORE CANNOT BE INCLUDED IN ACCUMULATED PROFIT. IF THIS FIGURE IS REDUCED THEN THE ACCUMULATED PROFIT OF THE COMPANY COMES TO RS.77,938/ - . THE DEEMED DIVIDEND CANNOT EXCEED THE ACCUMULATED PROFIT. THEREFORE, THE AO IS DIRECTED TO ADOPT THE FIGURE OF DEEMED DIVIDEND AT RS.77,938/ - AS AGAINST RS.2,58,179/ - . 7 . HEARD BOTH SIDES. RECORD PERUSED. THE ASSESSEE SEEKS TO DELETE THE IMPUGNED ADDITION OF DEEMED DIVIDEND. THE REVENUE SUPPORTS THE CIT(A) ORDERS. THERE IS NO ANY DISPUTE BETWEEN THE PARTIES ABOUT THE ASSESSEE S STAKE HOLDINGS IN THE CREDITOR ENTITY, ITS ACCUMULATED PROFITS (SUPRA) AND THE VERY FACTUM OF HAVING AVAILED IMPUGNED LO ANS AND ADVANCE. THE ASSESSEE FAILS TO REFER ANY FACTUAL EVIDENCE OR A JUDICIAL PRECEDE N T IN SUPPORT OF HIS ARGUMENTS. IN THESE CIRCUMSTANCES, WE UP HOLD THE CIT(A) IT (SS) A NO. 480 & 481 /AHD /201 1 DR. MUKESH BANSAL . FOR A.Y S . 200 4 - 0 5 AND 2006 - 07 - 6 - FINDINGS. THE A SSESSEE S SECOND GROUND IS DISMISSED. CASE APPEAL IT (SS) A NO.481/AHD/ 2011 IS PARTLY ALLOWED. 8. THE A SSESSEE S BOTH A PPEAL S ITA NO S .480 & 481/AHD/2011 ARE PARTLY ALLOWED. PRONOUNCED IN OPEN COURT ON 17.4.2015 SD/ - SD/ - ( G. D. AGARWAL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 17 / 0 4 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD